President Joe Biden has announced his long-awaited student loan forgiveness. $20,000 forgiveness for Pell Grant recipients and $10,000 forgiveness for federal student loan borrowers.
The announcement, which has been cheered by Democrats and jeered by Republicans, has raised many questions. Here are answers to some of the most pressing questions.
Will Biden’s Student Loan Forgiveness Raise Inflation?
When Biden announced plans to forgive student loans, the immediate backlash was that this move would heighten the 40-year high inflation rate. Economists have warned the impact on inflation could be tremendous, others have believed the effects will only be marginal.
Experts have also noted that the pause in repayments had already been inflationary, noting that pouring half a trillion dollars of student loan debt was reckless.
Will Loan Forgiveness Lead to Colleges Raising Tuition?
Many have speculated that colleges would raise tuition as they prepare for the potential of more student loan forgiveness.
But whether it will have an immediate impact on tuition isn’t clear. Some believe that the number of processes would mean any effect on tuition wouldn’t be immediate.
Will This Withstand Court Challenges?
Those looking forward to the student loan forgiveness are wary about celebrating as they wonder whether the plan would stand up when it’s challenged in court.
On Thursday (August 25), White House Press Secretary Karine Jean-Pierre calmed such worries, expressing that the administration was confident in the plan’s legal authority, believing the steps would hold up in court.
Who is Eligible for Forgiveness?
According to most estimates, only 5 percent of student loan borrowers are ineligible for forgiveness.
Single people earning less than $125,000 a year and married couples earning less than $250,000 are eligible for forgiveness.